02/04/2013 08:00 AM House EDUCATION
| Audio | Topic |
|---|---|
| Start | |
| HB27 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 27 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE EDUCATION STANDING COMMITTEE
February 4, 2013
8:01 a.m.
MEMBERS PRESENT
Representative Lynn Gattis, Chair
Representative Lora Reinbold, Vice Chair
Representative Gabrielle LeDoux
Representative Dan Saddler
Representative Paul Seaton
Representative Peggy Wilson
Representative Harriet Drummond
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 27
"An Act relating to student counts, unreserved school operating
fund balances, restrictions on school district money, and
estimates for public school funding; and providing for an
effective date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 27
SHORT TITLE: STUDENT COUNT ESTIMATES
SPONSOR(s): REPRESENTATIVE(s) FEIGE, COSTELLO, GATTIS
01/16/13 (H) PREFILE RELEASED 1/7/13
01/16/13 (H) READ THE FIRST TIME - REFERRALS
01/16/13 (H) EDC, FIN
02/04/13 (H) EDC AT 8:00 AM CAPITOL 106
WITNESS REGISTER
REPRESENTATIVE ERIC FEIGE
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: As the bill sponsor, introduced HB 27.
MICHAEL PASCHALL, Staff
Representative Eric Feige
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented HB 27 on behalf of the sponsor,
Representative Feige.
LUKE FULP, Chief Business Official
Business & Operations
Matanuska-Susitna Borough School District
Palmer, Alaska
POSITION STATEMENT: Answered questions during presentation of
HB 27.
PETE LEWIS, Superintendent
Fairbanks North Star Borough School District
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of HB 27.
LARRY DEVILBISS, Mayor
Matanuska-Susitna Borough
Palmer, Alaska
POSITION STATEMENT: Testified during discussion of HB 27.
ELIZABETH NUDELMAN, Director
School Finance and Facilities Section
Department of Education and Early Development (EED)
Juneau, Alaska
POSITION STATEMENT: Answered questions during discussion of HB
27.
PEGGY COWAN, Superintendent
North Slope Borough School District
Barrow, Alaska
POSITION STATEMENT: Testified during discussion of HB 27.
DUNCAN WARE, Superintendent
Delta/Greely School District
Delta Junction, Alaska
POSITION STATEMENT: Testified in support of HB 27.
CARL ROSE, Executive Director
Association of Alaska School Boards (AASB)
Juneau, Alaska
POSITION STATEMENT: Testified in support of HB 27.
BILL MCLEOD, Superintendent
Dillingham City School District
Dillingham, Alaska
POSITION STATEMENT: Testified in support of HB 27.
ACTION NARRATIVE
8:01:55 AM
CHAIR LYNN GATTIS called the House Education Standing Committee
meeting to order at 8:01 a.m. Representatives Gattis, Reinbold,
P. Wilson, Drummond, Seaton, Saddler, and LeDoux were present at
the call to order.
HB 27-STUDENT COUNT ESTIMATES
8:02:49 AM
CHAIR GATTIS announced that the only order of business would be
HOUSE BILL NO. 27 "An Act relating to student counts, unreserved
school operating fund balances, restrictions on school district
money, and estimates for public school funding; and providing
for an effective date."
8:03:04 AM
REPRESENTATIVE ERIC FEIGE, Alaska State Legislature, said that
the genesis of the proposed bill was based on both his personal
experience and reported observations of school superintendents
in his district. He explained that the bill addresses school
budgeting using student counts taken during the year for which
the funding is applied, even though the planning for this
funding began 10-11 months prior to the actual count. He
pointed out that this format requires that school administrators
plan for a variety of possibilities.
8:05:13 AM
MICHAEL PASCHALL, Staff, Representative Eric Feige, Alaska State
Legislature, said that funding is often cited as a major issue
for education, and indicated that the bill provides better means
for school districts to budget money which they receive. He
noted that the committee has heard from the Department of
Education and Early Development (EED) with a presentation on
average daily membership (ADM) and the formula calculation for
the base student allocation (BSA).
8:06:08 AM
MR. PASCHALL, referred to the "Public School Funding Program
Overview" handout [included in members' packets], and directed
attention to page 8, to point out that the current process
utilizes an estimated foundation number. He explained that HB
27 would change this method from estimations to actual numbers.
Identifying slide 2, "Application of ADM to BSA," of the
PowerPoint entitled "HB 27 Application of Average Daily
Membership to Base Student Allocation," he explained that the
school district budgeting process estimated student enrollment
in January, conducted a student count in October, and received a
count confirmation the following January. He noted that the
school district received funding from July through March based
on the estimated funding, and then received funding from April
through June based on any adjustment to the confirmed student
count. He established that the proposed bill would switch the
budget period and the confirmation period, so that the fiscal
year expenditures would begin with a calculated hard number
instead of an estimate. He referred to the hold harmless
provision included in the proposed bill, which would allow for
supplemental funding to the school district in April through
June for any large increase in enrollment which resulted in
additional costs earlier in the school year.
8:09:13 AM
MR. PASCHALL moved on to slide 3, "Variations in ADM
Projections," and offered examples of student counts that were
too high and too low, and highlighted the variation in
percentages from student count fluctuations for small school
districts and large school districts.
8:10:36 AM
REPRESENTATIVE P. WILSON asked for clarification.
MR. PASCHALL explained that, as funding was based on an
estimate, the payment distributions could be either too high or
too low depending on the actual numbers. Although the payment
would be adjusted in the last quarter of the fiscal year, it
would not be known until almost mid-way through the fiscal year.
8:11:42 AM
REPRESENTATIVE LEDOUX asked about any recourse if the estimate
was too high.
MR. PASCHALL replied that funding within the existing formula
provided 12 equal payments based on the projection, so the
actual payment in the final quarter was adjusted up or down
based on the payments in the previous three quarters.
8:12:20 AM
REPRESENTATIVE SEATON asked for more information about the
funding examples on slide 3.
MR. PASCHALL explained that these examples were for district-
wide numbers, not individual schools.
8:13:18 AM
CHAIR GATTIS offered her belief that the impact from the
estimates was easier for larger school districts to absorb, and
would have a much greater effect on smaller school districts.
MR. PASCHALL opined that even the large districts would report
that a small percentage for student differential had a
significant financial impact.
REPRESENTATIVE SEATON reflected that a small school had a school
size multiplier, and it would be necessary to consider the
entire formula and its effect on the funding. He asked if the
previous school year hard number was any more accurate than an
estimate which would include projected transfers and pre-school
additions.
8:15:40 AM
MR. PASCHALL agreed that the school district would use the
actual numbers to budget for the up-coming school year. He
pointed out that the adjustment would be received in the
following year over a twelve month period.
REPRESENTATIVE SEATON asked to clarify that the additional
funding would not be received until the following year.
MR. PASCHALL explained that the money would be received the
following year, although it would be based on that year's
current enrollment. He noted that the "hold harmless" provision
could be invoked if there was a drastic change to the student
numbers.
8:17:09 AM
MR. PASCHALL introduced slide 4, "Statewide Average Daily
Membership Fiscal Year 1988-2011," and noted that the average
had been relatively flat for the past decade. He moved on to
slide 5, "Statewide ADM FY 2002-2011," and pointed out that
there had been a statewide 2.7 percent decrease in student
population. Indicating slide 6, "The Biggest Losses," he
reported that the portrayed districts had the largest enrollment
drops. He noted that slide 7, "The Biggest Gains," reflected
the modest gains for some districts, with the exception of a
continual gain by the Matanuska-Susitna Borough School District.
8:19:04 AM
MR. PASCHALL explained that budgeting with actual numbers still
required adjustment for unanticipated changes and that the
reserve funds were used to pay for these adjustments. He
reported that historically school districts had been allowed to
retain 10 percent of their operating fund in a reserve account.
In 2011, the Government Financial Officers Association issued a
new best practice, which suggested a reserve account balance
equal to two months of operating expenditure, about 16.6
percent. He stated that proposed HB 27 recommended an increase
of the reserve account balance to 15 percent, in order to allow
the school board more autonomy for capital purchases,
significant repairs, or changes in operating environment.
8:20:54 AM
REPRESENTATIVE LEDOUX asked for the rationale to any limit for
the reserve account balance.
MR. PASCHALL speculated that, as the legislature would prefer
not to fund a school district with money that was not being
spent, there was a limit placed on the reserve account.
8:21:58 AM
REPRESENTATIVE SEATON referred to the proposed bill, page 9,
line 9, and read:
A district many not accumulate in a fiscal year an
unreserved portion of its year-end fund balance in its
school operating fund... greater than 15 percent of
its expenditures for that fiscal year.
He observed that this referred to an unreserved portion, and
asked if there was also a reserved, or any other, portion for
accumulated funds.
MR. PASCHALL deferred to the Department of Education and Early
Development (EED) for a more detailed response about reserve
accounts.
8:23:12 AM
MR. PASCHALL directed attention to slide 9, "Returned Funds,"
and explained that these two municipalities, Fairbanks North
Star Borough and Matanuska-Susitna Borough School District, had
chosen to allocate funding to the schools and, at year's end, to
recoup any unspent funds. He explained that this money was
removed from the reserve fund and re-allocated into capital
accounts. He pointed out that the school operating expenses,
and the reserve fund, were funded by both the municipality and
the State of Alaska. He acknowledged that it was questionable
whether the money reclaimed by the municipality was, in fact,
its money or the state's money.
8:24:22 AM
REPRESENTATIVE LEDOUX, assessing that most entities spent all of
the allocated funding, asked if this was not the same for these
school districts.
MR. PASCHALL offered his belief that a school district began
operation using financial information which assumed certain
funding, but this did not become actual financial information
until January, which could then impact funding.
8:25:30 AM
REPRESENTATIVE P. WILSON asked if the school district was
allowed to retain 10 percent.
MR. PASCHALL directed attention to slide 9, which illustrated
that the Matanuska-Susitna Borough took $1.3 million from the
Matanuska-Susitna Borough School District at year's end, leaving
a reserve balance of 0.6 percent.
8:26:19 AM
REPRESENTATIVE DRUMMOND reflected that the Anchorage School
District was required to maintain a joint fund balance of 8.25
percent with the Municipality of Anchorage which preserved a
joint bond rating.
MR. PASCHALL replied that not all the boroughs withdrew the
school district reserve funds. He specified that his office had
not received any objections from any school districts pertaining
to the provisions in the proposed bill. He allowed that, as
this was a significant issue for both the Fairbanks North Star
Borough and the Matanuska-Susitna Borough, the aforementioned
provision was added to the proposed bill.
8:27:43 AM
REPRESENTATIVE P. WILSON asked to clarify how a statute could
allow a school district to retain 10 percent of operating
expenses in a reserve account, yet the borough was able to
remove that funding.
MR. PASCHALL opined that a school district was allowed, but not
required, to keep the money. He suggested that a legal
interpretation was necessary.
8:28:39 AM
REPRESENTATIVE LEDOUX asked why the school districts did not
spend this reserve money on necessary items, as opposed to
returning the money to the borough.
MR. PASCHALL deferred to the Matanuska-Susitna Borough School
District.
8:29:48 AM
LUKE FULP, Chief Business Official, Business & Operations,
Matanuska-Susitna Borough School District, explained that it was
not sound fiscal policy to spend in order to alleviate any year-
end funding reserves. He pointed out that having only $268
thousand to return to the Borough from an original operating
budget of $220 million reflected very strategic financial
planning. He stated that the fund balance provision in proposed
HB 27 would "definitely help us in allowing us to hold a reserve
that really is commensurate with the size of budget we're trying
to operate." He communicated that although it would not be two
months of operating expenses, it would allow a smooth annual
expenditure transition for funding shortfalls.
REPRESENTATIVE LEDOUX asked if proposed HB 27 would prohibit the
boroughs from taking the excess funds.
MR. PASCHALL expressed his agreement.
8:31:39 AM
REPRESENTATIVE SEATON asked if there was concern that the
borough would not fund to the school district an amount
equivalent to the reserve fund.
MR. FULP replied that this would be a transparent public
process, as the borough could analyze the school district
resources, and determine the appropriation for the upcoming
fiscal year. He stated that this approach was supported by the
school district as the public would then know exactly how much
education funding was given by the municipality. Referring to
an earlier question regarding the legality for the removal of
reserve funds by the borough, he noted that any remaining
reserve funds above the minimum required could be removed by the
borough.
8:34:16 AM
REPRESENTATIVE LEDOUX asked if there was anticipation for more
money from the municipality if this provision was passed.
MR. FULP replied that he could not predict the amount of money,
but the proposed provision would allow for a more transparent
public process with the determination by the municipality of
school funding appropriations.
8:35:06 AM
REPRESENTATIVE P. WILSON asked to clarify that if a borough
allocated more funding than was required at the beginning of the
year, it could appropriate the excess funding at the end of the
year.
MR. FULP expressed his agreement.
REPRESENTATIVE P. WILSON asked if the proposed 5 percent
increase would make a difference, or should the proposed bill be
amended to only allow the appropriation of any reserve above 15
percent.
MR. FULP opined that the intent of the proposed bill was to
eliminate any possibility for the borough to place additional
restrictions on fund balances.
MR. PASCHALL added that Section 4 of the proposed bill stated
that a borough may not take back funds that were originally
appropriated for the school district.
8:37:05 AM
REPRESENTATIVE SEATON asked to clarify whether there was a
greater risk for not enough funding during the current year if
the borough was calculating the fund balance, as the increased
student count would allow for more state funding in the
following year. He asked if the borough could potentially not
appropriate enough money.
MR. FULP, in response to Representative Seaton, offered his
belief that this mechanism for school district budgeting still
had many unknowns. He shared that the Matanuska-Susitna Borough
School District had been working with the borough on a long-term
funding plan. He noted that the Matanuska-Susitna Borough was
split on opinion for the borough to appropriate the excess
funding at the end of the budget period. He reported that House
Bill 273, enacted in 2008, had approved a multi-year funding
plan with an increase in the foundation formula, which allowed
the school district to know the state funding three years in
advance. He declared that this alleviated a great deal of
financial uncertainty each year. However, the current year to
year funding methodology for school districts required that the
districts maintain the fund balances. He declared support for
proposed HB 27, as it allowed the school district to maintain
its fund balance which helped smooth over unforeseen operating
cost shortfalls from year to year. He pointed out that, as the
Matanuska-Susitna Borough School District student count was
increasing, with prior year student count funding the district
would need to maintain the fund balance in order to pay for
expense increases until the funding was brought up to date.
8:41:53 AM
MR. PASCHALL presented a sectional analysis for proposed HB 27.
He noted that Sections 1-3 were only necessary conforming
language pertaining to previously made capital expenditures. He
said that Section 4 prohibited the municipality from [taking]
money from the schools, and created transparency in the
budgeting process, so that the community at large would better
understand how much money had been budgeted. He declared that
Section 5 was additional conforming language. He explained that
Section 6 contained the hold harmless provision to provide a
school district with additional funding if there was any sharp
increase in enrollment. He indicated that the fiscal note
attached to the proposed bill had been prepared by Department of
Education and Early Development (EED), although it was difficult
to predict student counts.
8:44:34 AM
REPRESENTATIVE SADDLER directed attention to page 8, lines 21-
31, and he asked to clarify the conditions in which a district
would not qualify for supplemental funding.
MR. PASCHALL explained that this section allowed a school
district having a significant enrollment increase, which did not
qualify for supplemental funding based on the formula, the
opportunity to request additional supplemental funding from the
legislature to handle the unforeseen financial hardships that
could occur. He offered an example for an increase in intensive
needs students, as the cost of education for these students was
13 times greater.
REPRESENTATIVE SADDLER asked for further explanation.
MR. PASCHALL offered as an example that the reserve fund
balances of school districts ranged from almost nothing to the
maximum allowed, and therefore some school districts would not
have the money to meet the necessary expenses.
REPRESENTATIVE SADDLER confirmed his understanding.
8:48:25 AM
REPRESENTATIVE LEDOUX asked to clarify what would happen in the
subsequent year, if additional funds were made available during
the current year under the hold harmless clause.
MR. PASCHALL explained that the fiscal note covered the
supplemental funding to the school district.
REPRESENTATIVE LEDOUX asked for more clarification regarding
subsequent funding.
MR. PASCHALL replied that additional expenditures could result
from increases in student population.
MR. FULP explained that the aforementioned provision would
impact growing school districts. He noted that for any school
system there was scalability and it was occasionally necessary
to have additional revenue to supplement actual needs for
drastic changes.
8:50:44 AM
REPRESENTATIVE SEATON, directing attention to page 8, line 28 of
the proposed bill, noted that the language was "for an increase
in enrollment" and asked if this would go into effect if there
were more special needs students, but no increase in enrollment.
He asked if there could be application for supplemental funding
if a school district was unable to fulfill its needs.
MR. PASCHALL expressed his agreement with the assessment, and
explained that this section was an effort to cover the many
contingencies that may arise and allow the legislature the
ability to address unforeseeable events.
REPRESENTATIVE SEATON asked to clarify that every small school
district would qualify for increased funding if there was a
student count increase.
MR. PASCHALL concurred.
8:54:53 AM
REPRESENTATIVE SADDLER returned attention to page 8, line 30,
and asked if the language "may request" should be replaced with
"shall request."
MR. PASCHALL indicated that EED had been consulted during the
drafting of the proposed bill. He offered his belief that this
was an analysis by EED to determine an actual need, before
including it in the budget. He stated that, otherwise, the
legislature would be dictating to the governor what could be
included in the supplemental budget, and he questioned its
legality.
8:57:00 AM
MR. PASCHALL returned attention to Section 7 of the sectional
analysis, and stated that this increased the reserve fund from
10 to 15 percent. He reflected that this could also be
increased, if requested. He moved on to Section 8 which would
apply the January student count to the following year rather
than the existing year, as currently applied. He reported that
Section 9 moved language from one portion of statute to another.
He mentioned that Section 10 removed the student count
estimates, and that Section 11 provided for an effective date.
8:58:29 AM
REPRESENTATIVE SADDLER, referring to the page 9, line 18 of the
proposed bill, asked if the state still operated a statewide
centralized correspondence study program.
MR. PASCHALL replied that he did not know if the program was
still in place.
8:59:14 AM
REPRESENTATIVE SEATON referred to page 9, line 12, of the
proposed bill, and asked for the reason to continue use of the
October student count.
MR. PASCHALL explained that the only existing count was the
October count, which allowed EED to certify the number by
January for its use in the spring budgeting by the school
district.
REPRESENTATIVE SEATON asked to clarify that the October count
would be applied to the upcoming budget year.
MR. PASCHALL agreed that the student count would apply to the
upcoming year, so that the student count could be fixed in the
budget and not require any adjustment.
9:02:17 AM
PETE LEWIS, Superintendent, Fairbanks North Star Borough School
District, read from a prepared statement:
This piece of legislation addresses multiple issues as
you've heard in the previous testimony and in
presentation. It addresses student counts for funding
purposes and this will allow school districts to be
able to plan ahead knowing the approximate funding
levels in the event of enrollment changes. That is a
positive for us. HB 27 also increases the limit of
the amount of unreserved school operating fund balance
from 10 to 15 percent. Since the Fairbanks North Star
Borough has a more restrictive local ordinance
regarding fund balance, this change would not impact
our district. And lastly the bill restricts the
assembly's ability to re-appropriate or require the
return of funds from the school district unless the
district is over the unrestricted fund balance limit.
With the proposed legislation, operating dollars would
remain with the school district. Currently, a lapse
ordinance exists in our Borough. The ordinance has
required that operating fund dollars be moved to a
borough school facilities maintenance fund, and to
date, that's over $4 million. The annual lapse amount
has been capped at $800,000 and the lapse calculation
is really two pronged here in Fairbanks. The first is
a calculation that looks at the operating revenue over
expenditures regardless of the source of timing or
source of that revenue. The second part looks at fund
balance. Regardless of this legislation, our fund
balance is capped at 7 percent of the local
contribution amount, which in our case is just over $3
million. So, we are nowhere close to the government
financial officers association recommended amount of
fund balance. Our current fund balance is just under
$100,000 and the previous year it was at zero. HB 27
would keep operating dollars with classrooms and
students where they belong. It makes the process
transparent and clear for everyone involved. As you
know, costs are high and many school districts are
struggling to make ends meet. HB 27 is a move in the
right direction, and we ask for your support.
9:04:52 AM
REPRESENTATIVE P. WILSON asked whether this proposed bill would
affect the borough funding to the school district.
MR. LEWIS replied that his school district was funded to
approximately 75 percent of capacity for local contribution. He
explained that the borough could choose to fund a facilities
maintenance fund up front, and this would allow the school
district to "plan better in a better way."
9:06:06 AM
REPRESENTATIVE SEATON, directing attention to page 9, line 8 of
the proposed bill, asked if local ordinances could supersede the
state regulations for the maximum balance in the school
operating fund.
MR. LEWIS expressed his agreement.
9:07:24 AM
LARRY DEVILBISS, Mayor, Matanuska-Susitna Borough, stated that
he had served on the school board as well as the city assembly.
He offered his belief that it was "bad policy to take away the
power of the body that's responsible for raising the money; any
power that controls how that money is spent, is bad policy." He
explained that school board members were elected with the
responsibility "to spend the money to the maximum benefit of the
education," but the assembly members were "elected to come up
with raising that money, it's why you're given the taxing
authority." He opined that those people elected for taxing and
raising the money should have the maximum control over the
money. He pointed out that in his district the fund balance was
negotiated, and he opined that there had been success in meeting
the needs of the school district. He expressed his
understanding of the school district need for funds to
transition between budget cycles. He said that a forward
funding formula was being worked on to enable the school
district "to do business in a responsible way across one fiscal
year to the next, and that's where the fund balance is always
helpful to them." He noted that the current agreement with the
school district was for a 50-50 split, but that it was
negotiable.
9:10:27 AM
REPRESENTATIVE SEATON asked whether the Matanuska-Susitna
Borough had a restrictive ordinance similar to Fairbanks,
Alaska.
MAYOR DEVILBISS replied that he did not know who set the cap,
but he did recognize the cap as a component of the borough code.
9:11:36 AM
ELIZABETH NUDELMAN, Director, School Finance and Facilities
Section, Department of Education and Early Development (EED),
said that she was available to answer questions.
9:11:49 AM
REPRESENTATIVE P. WILSON, directing attention to page 5, line 8
of the proposed bill, asked if it was necessary to include
"council members" as some areas did not have an "assembly."
MS. NUDELMAN replied that she did not know, as that was specific
language outside EED.
9:12:58 AM
REPRESENTATIVE SADDLER, referring to page 8, lines 21-31 of the
proposed bill, asked if there were any situation where an
increase to the student population of a district would not
exceed 3 percent or 200 students, yet could still cause a
shortfall, necessitating a request for supplemental funding.
MS. NUDELMAN replied that EED had not previously worked with
similar language, but she offered her belief that the
circumstance could be found.
REPRESENTATIVE SADDLER surmised that an increase to special
needs students, as discussed earlier, would automatically
increase federal funding to the school district through the
foundation formula.
MS. NUDELMAN opined that the language of the proposed bill was
not clear as to how intensive needs students would be addressed,
unless they coincided with an increase of enrollment.
REPRESENTATIVE SADDLER referred to page 8, line 30, and asked if
this language gave EED the option to request supplemental
funding, or should the language reflect an obligation to request
supplemental funding in this situation.
MS. NUDELMAN explained that EED worked with the governor's
budget annually, and she expressed that she was unsure for the
best avenue to seek supplemental funding. She said that it may
not be in the department's purview to seek supplemental funding
when the language of the proposed bill stated "may"; however, if
the proposed bill language said "shall", and this was found to
be legally acceptable, then EED would seek supplemental funding.
She suggested that the language needed clarity.
9:16:32 AM
REPRESENTATIVE P. WILSON mused that if EED was required to
distribute the supplemental funding, then there would be "a
bunch of people applying because they know they'll get it." She
opined that, in this case, the use of "may" would be correct, as
it would allow EED the option for awarding supplemental funding.
9:18:07 AM
REPRESENTATIVE SEATON pointed out that the fiscal note indicated
that 11 districts, or 20 percent of all the state districts,
would qualify annually under the hold harmless provision. He
asked how administration of this program would work.
REPRESENTATIVE SEATON, in response to Ms. Nudelman, clarified
that page 8, line 24 stated that "the department shall provide
supplemental funding" and yet the fiscal note did not reflect
any cost for this procedure.
MS. NUDELMAN replied that the fiscal note had been calculated by
comparing the preliminary 2013 adjusted average daily membership
(ADM) at the school size point to the 2012 actual ADM. She said
that it was not exactly clear where the supplemental funding
would come from, but she suggested it would be a component of
the funding formula, and the appropriation would be allocated as
there were funds.
REPRESENTATIVE SEATON requested that EED provide a sequential,
graphic explanation for how this could be implemented, as EED
was required to provide the supplemental funding. He requested
that information be provided for the district sizes of the 11
school districts indicated in the fiscal note. He then
indicated page 9, line 8 of the proposed bill and asked if there
were also reserved portions of the school operating fund, and if
there was any interaction between reserved and unreserved funds.
MS. NUDELMAN replied that the law allowed for a fund balance of
reserved and unreserved components. She stated that the
reserved components were identified in regulation, and were for
encumbrances, inventories, pre-paid expenses, self-insurance,
and the piece of impact aide which districts used in the
following year. She said that these five categories were
separated out of the unreserved funds.
REPRESENTATIVE SEATON asked to clarify that, as the unreserved
portion was being increased from 10 to 15 percent, it seemed as
though the school district had the ability to move the funds
between these categories to create a fund balance in excess of
this 10 or 15 percent.
MS. NUDELMAN agreed that the cap on the fund balance was only
for the unreserved component, so that any funds in the reserved
component were not susceptible to the cap.
REPRESENTATIVE SEATON asked to have EED provide a sampling of
reserved and unreserved balances from large, medium, and small
school districts.
9:25:55 AM
REPRESENTATIVE SADDLER asked if there was currently a
centralized correspondence program.
MS. NUDELMAN replied that there was not a centralized
correspondence program throughout the state, but a
correspondence program was now administered by the individual
school districts.
REPRESENTATIVE SADDLER asked if the reference on page 9, line 18
was still valid.
MS. NUDELMAN replied that the reference should be reviewed for
relevance.
9:27:12 AM
REPRESENTATIVE P. WILSON requested that EED recommend new
language regarding the correspondence programs.
MS. NUDELMAN suggested that only the words on page 9, line 18
should be reconsidered.
9:28:16 AM
MR. PASCHALL confirmed that the proposed bill must interact with
all existing statutes and that it would be necessary for
Legislative Legal and Research Services to write amendments to
the statute pertaining to all portions of the centralized
correspondence program that were no longer in place. He noted
that this could require not only an amendment, but a bill title
change, as well.
9:29:17 AM
REPRESENTATIVE SADDLER suggested that the revisor of statutes
may need to consider this for future actions.
9:29:50 AM
CHAIR GATTIS opened public testimony.
9:30:30 AM
PEGGY COWAN, Superintendent, North Slope Borough School
District, said that the school board did not have a position on
proposed HB 27. She explained that this bill "does not fix the
budget gap," noting that her district had cut 30 positions over
that last few years due to flat funding and increased
expenditures. She spoke in support of the provisions proposed
on page 4, line 28, Section 4, which allowed school districts to
maintain a fund balance. She pointed out that the hold harmless
provisions were important, and she provided an example of the
increased enrollment from incoming children attending the pre-
school program which then required an additional teacher for the
current year.
9:34:30 AM
REPRESENTATIVE SEATON, referring to her example for increased
enrollment, asked if the student estimate based on the previous
year count was better for funding than an October count for the
current year. He asked if there was a balance between incoming
and graduating students.
MS. COWAN explained that, since 1999, her district only had an
increased enrollment for three years. She noted that, as the
upcoming year was projected for an increase in students, the
district would not receive as much funding as a count during the
current year. She opined that the school district would not
reach the 3 percent threshold to qualify for supplemental
funding. She expressed her appreciation for the "attempt at
planning, certainly the hold harmless clauses are important
because of those very reasons, because if we do have more
students and have to spend more money on them, then the hold
harmless clauses ... are very significant for districts such as
ours and others across the state."
9:37:15 AM
DUNCAN WARE, Superintendent, Delta/Greely School District, said
that efficient planning was important, especially in times of
austere budgets. He declared his support for proposed HB 27, as
it was important for school districts to do adequate planning
and be able to plan their funding. He reported that, although
his school district had remained static, the hold harmless
provisions were greatly advantageous. He reported that the
percentage increase for the reserve funds was beneficial.
9:39:00 AM
REPRESENTATIVE SEATON asked to clarify that the school
district's federal funding was in a reserved account, as opposed
to an unreserved account.
MR. WARE replied that the impact aide, about $38,000, and the
supplemental funding from the Department of Defense, about
$53,000, had been designated by the school board to a reserve
fund for curricula materials to support the classroom teachers.
9:40:17 AM
CARL ROSE, Executive Director, Association of Alaska School
Boards (AASB), stated support by AASB for proposed HB 27. He
said that the issues were complicated and there were arguments
for both sides. He expressed his belief that dollars which were
appropriated for education should be protected and be used for
education. He agreed that once funds from municipalities were
co-mingled with state and federal funds, it became unclear which
funding remained. He expressed support for clarifying the
percentage of funding to be protected. He pointed out that
planning, especially during times of scarce resources, was
extremely important. He noted that enrollment, adjusted average
daily membership (ADM), and base student allocation were all
necessary elements to dictate levels of funding. He stated that
proposed HB 27 would "be very helpful" for planning purposes.
9:42:17 AM
REPRESENTATIVE SEATON, directing attention to the hold harmless
provision of 200 students or 3 percent, asked whether this
should be adjusted for school size factors.
MR. ROSE replied that the adjusted ADM was the most important
number. He offered his belief that the diversity of the state
ensured that any decision would not work for everyone, and this
would be true for this provision, as well.
9:43:34 AM
REPRESENTATIVE SADDLER asked if there would be any unintended
consequences, including large amounts of additional funding
being required.
MR. ROSE, in response to Representative Saddler, said that he
was never able to foresee the unintended consequences. He
opined that there was not going to be any overage for funding.
Referring to the earlier discussions for "shall" versus "may",
he shared that he preferred "shall" for an important issue, and
"may" when the need for latitude is a component.
9:45:01 AM
BILL MCLEOD, Superintendent, Dillingham City School District,
said that proposed HB 27 was a good bill for education. He
shared that budget planning was difficult in Alaska, as it
required use of the October enrollment count, and an early
projection of revenue and expenses. He declared that the
enrollment count was very important, as it was the driver for
much of the funding. Using the known enrollment count from
October of the current year for the next year's budget would be
very helpful to his school district as the current enrollment
was higher than the projected enrollment. He reported that
rural Alaska had a shifting population base and that using the
known enrollment for the projected funding would stabilize the
planning process. He suggested that the 3 percent threshold for
the hold harmless provision might need to be adjusted for
smaller, rural school districts to allow for declines or
increases. He discussed that uses for the reserved fund was
mandated, but the unreserved fund was less restrictive, and he
asked for caution in making changes to the reserved funds. He
pointed to the importance for the inclusion of intensive needs
students in the regular enrollment count as the multiplier was
especially important to a small school district. He stated the
need for assurance for this funding, and that local governance
could best decide the need and the allocation for expenditure.
9:51:06 AM
CHAIR GATTIS closed public testimony.
9:51:14 AM
REPRESENTATIVE DRUMMOND expressed interest in receiving comments
specifically from the Anchorage School District and the
Anchorage Assembly.
9:51:54 AM
CHAIR GATTIS announced that HB 27 would be held over.
9:52:16 AM
ADJOURNMENT
There being no further business before the committee, the House
Education Standing Committee meeting was adjourned at 9:52 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 27 28-LS0171A Student Counts.pdf |
HEDC 2/4/2013 8:00:00 AM |
HB 27 |
| HB 27 DEED Funding_Program_Overview_2012.pdf |
HEDC 2/4/2013 8:00:00 AM |
HB 27 |
| HB 27 Fund Balances MSBSD.pdf |
HEDC 2/4/2013 8:00:00 AM |
HB 27 |
| HB 27 Presenation to House Education.pdf |
HEDC 2/4/2013 8:00:00 AM |
HB 27 |
| HB 27 SPONSOR STATEMENT Student Counts.pdf |
HEDC 2/4/2013 8:00:00 AM |
HB 27 |
| HB 27 28-LS0171A Sectional Analysis.pdf |
HEDC 2/4/2013 8:00:00 AM |
HB 27 |